New Delhi: Inflation rose fastest in six months to stand at 1.51 percent, much in line with the RBI's warning that inflationary pressures are building up in the economy, prompting it to tighten money supply.
Inflation grew by 0.30 percentage points during the week
ended October 17 from 1.21 percent in the previous week, even
as many food items became cheaper.
However, on yearly basis, food stuffs remained expensive, turning costlier by 12.85 percent, with potato prices soaring by 97.73 perent, onion 45.26 percent, sugar 45.73 percent and pulses 22.92 percent.
Inflation rose even on high base effect as it stood at
10.82 percent a year ago.
Analysts said from now on inflation will be on the rise and may touch 6.5 percent as projected by the Reserve Bank. "RBI's projection of a 6.5 percent inflation is realistic," Crisil Principal Economist D K Joshi said.
Many economists are, however, hopeful about food prices coming down as on weekly basis these have started declining.
Food prices declined 0.07 percent on weekly basis as mainly vegetables and sea fish prices came down. However, some
items like cereals and pulses may remain costly.
"Price of primary articles have begun to come off which could be a seasonal phenomenon. Prices of frozen food is likely to remain stable, although cost of cereals, pulses may remain elevated," Yes Bank Chief Economist Shubhada Rao said.
To tame inflationary expectations, the RBI has raised
the Statutory Liquidity Ratio (SLR), the amount banks are to
keep in government securities, cash and gold, by one
percentage point to 25 percent.
The central bank has also discontinued the special
liquidity window for banks to provide fund for mutual funds.
It said there are clear signs of rising inflation stemming
largely from the supply side, particularly from food prices.
Already inflation has risen at the rate of 5.95 percent
so far from the beginning of this fiscal.
During the week ended October 17, prices of mutton, tea,
maize, arhar, moong, condiments and spices rose by one per
cent each.
Among manufactured goods, imported edible oil and gur
turned expensive by four per cent each, rice bran oil by 3
per cent and oil cakes by two per cent.
However, prices of butter and groundnut oil declined by
two percent each and ghee by one per cent.
In the fuel category, bitumen prices moved up by 2 per
cent.
For the week ended August 22, wholesale price inflation
stood at 0.17 percent as compared to minus 0.21 percent,
according to revised estimates.
Bureau Report